Russia's invasion of Ukraine disrupted the global uranium market. Uranium is an essential component for the operation of nuclear power plants. According to the Bank of America, uranium prices had climbed 50% as of April 13 to hit $63.60/pound and could soar further due to the bans on Russian imports by Western countries.
The sector should continue to thrive due to a combination of current demand from the world's 445 already active nuclear reactors, which supply around 10% of global power, and the construction of additional reactors as demand for carbon-free electricity grows. Furthermore, on Tuesday, the Biden administration opened applications for a $6 billion program to help nuclear power plants that are struggling with rising costs.
Given this backdrop, we believe ETFs with significant exposure to uranium, Global X Uranium ETF (URA) and North Shorte Global Uranium Mining ETF (URNM), could be solid bets now.
Global X Uranium ETF (URA)
URA allows investors to gain exposure to uranium, a crucial mineral that is currently inaccessible via futures. URA is an excellent option for investors looking to bet on increased demand for a raw material used widely in power production.
With $2.20 billion in assets under management (AUM), URA's top holdings include Cameco Corporation with a 25.4% weighting; Sprott Physical Gold Trust Units (PHYS) at 6.6%; and NexGen Energy Ltd. (NXE) at 6%. Over the past month, the ETF's fund flows came in at $180.7 million. In addition, URA's 0.69% expense ratio compares with a 0.55% category average.
Closing the last trading session at $26.86, the ETF is currently trading below its 52-week high of $29.89. URA's NAV stands at $27.34. The fund has gained 17.7% year-to-date and 43.6% over the past nine months.
URA's POWR Ratings reflect this promising outlook. The ETF has an overall rating of B, which equates to Buy in our proprietary rating system.
URA has an A grade for Trade and a B for Buy & Hold. Among the 117 ETFs in the A-rated Commodity ETFs group, URA is ranked #54. In addition to this, one can access URA's Peer grade here.
North Shorte Global Uranium Mining ETF (URNM)
URNM provides access to various global companies engaged in mining, exploration, development, and production of uranium and companies that hold physical uranium, uranium royalties, or other non-mining assets.
The fund has approximately $1.21 billion in AUM. National Atomic Company Kazatomprom JSC Sponsored GDR RegS is the top holding of URNM, with a 15.5% weighting, followed by Cameco Corporation, with 14.8% weighting.
URNM has a 0.85% expense ratio versus the 0.55% category average. Over the past month, the ETF's fund flows came in at $85.13 million. The fund has gained 22.2% in price year-to-date and 67.2% over the past nine months.
Closing the last trading session at $88.04, the ETF is currently trading below its 52-week high of $97.91. URNM's NAV stands at $90.27.
It is no surprise that URNM has an overall B rating, which translates to Buy in our POWR Ratings system. It also has an A for Trade grade and a B for Peer and Buy & Hold grade. In addition, it is currently ranked #22 of 38 ETFs in the A-rated Precious Metals ETFs.
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URA shares were trading at $27.37 per share on Wednesday morning, up $0.51 (+1.90%). Year-to-date, URA has gained 19.94%, versus a -5.77% rise in the benchmark S&P 500 index during the same period.
About the Author: Spandan Khandelwal
Spandan's is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing.
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